article banner

Still on federalism

Benjamin R. Punongbayan Benjamin R. Punongbayan
Still on federalism

By Benjamin R. Punongbayan

FEDERALISM is now getting wider attention. This is good.

It is clear that this structure of government, which is totally alien to us, is being pushed down our throats with the convening of the Consultative Committee on Constitutional Reform.

The outcome is already predetermined with regard to federalism, because it appears that the ConCom members were chosen on the basis of their belief or advocacy of federalism. There is no more debate inside the committee on whether to adopt federalism. This way of doing things reinforces my doubt about our form of government being truly democratic. The power of the incumbent is too strong and the system so oligarchic and self-centered that there exists no organized effective opposition that can check or modify such important decisions. Even the learned members of the ConCom do not seem to care about this one-sided affair. I guess the ConCom has to be seen as an appendage to the power of the incumbent.

According to its advocates, federalism provides a uniform framework under which the concept of government for the proposed Bangsamoro can fit in. But this appears not to be absolutely necessary. The President himself wants the pending bill on the Bangsamoro Basic Law approved ahead of the adoption of federalism. A few legal luminaries even say that the bill, as presently constructed, is constitutional.

I sense that the proponents of Bangsamoro want a lot more autonomy than any form of Philippine federalism can possibly offer to the non-Bangsamoro Philippine states. Bangsamoro wants its own control over its police function, and this power is provided in the pending bill. Some weeks ago, however, the President had indicated that he could not possibly allow Bangsamoro to have control over its police. It then follows that the non-Bangsamoro Philippine states will also not have control over their own police under Philippine federalism.

I doubt very much whether Bangsamoro will accept autonomy without its government having control over its own police. For this reason and to achieve peace in the Autonomous Region of Muslim Mindanao, police control may eventually be given to Bangsamoro.

However, I sense that the same autonomous police power will not be granted to the much greater number of non-Bangsamoro states. If so, the Philippines will not have a uniform form of federalism, and this condition may cause troubles in the future.

But much more than this, without state control over the police, we are not talking about real federalism. Under such condition, how can a supposedly autonomous state enforce what it wants to do and be able to shape its own destiny within the bounds of Philippine federalism?

We are borrowing the concept of federalism from successful and well-developed federal countries. I do not think we can pick and choose elements of federalism established by those countries and achieve the same results.

In the United States, for example, each US state has its own police force that the state alone controls. Each US state even has its own National Guards that the state governor can call at a moment’s notice.

My other serious objection about the Philippines adopting federalism is its financial consequence.

An important principle that federalism advocates keep on saying is a favorable factor for federalism is that each Philippine state will have control over its own finances. Whatever money the state raises, less the amount it pays to the central government, will be used for its own development. This supposedly magic formula for development comes from the perception, especially in Mindanao, that much of the money raised by the Philippine unitary government arising from Mindanao is not channeled to the development of Mindanao itself but, instead, is used elsewhere or wasted by the central government.

But think more about it.

No matter how the Philippines is divided into federal states, there will be states that cannot support themselves from their own internal resources. There will be more poor states than rich states. The rich states will be in the National Capital Region, Region III, and Region IV-A. All the rest will be relatively poor.

Rather than debate this statement endlessly, there is a clear and persuasive way of establishing the financial implications of Philippine federalism. I believe very strongly that the proponents must show clearly the financial implications of federalism for the whole country and for each state. Otherwise, federalism advocates are being extremely reckless.

There is a well-developed tool for country economic forecasting, which is generally described as econometrics. There are now many experts in this field. We must use this tool to understand what we are doing and where we are headed. We do not need to do this for each Philippine state right away.

All that we need at this stage is to develop prototypes — northeast Mindanao and/or the Bicol Region may be good prototypes.

Using econometrics, we can forecast the economic growth of the prototype for a short-term period — say 5 years — on the basis of the state using only its own resources.

If the resulting growth rate is not acceptable, set a desirable growth rate and determine the additional amount of money that is needed to achieve it.

My anticipation is that neither northeast Mindanao nor Bicol can achieve a respectable economic growth by itself, more especially on a per capita basis. Each one will need substantial subsidies to achieve desirable economic growth. But where will the money come from? Well, there is only one source — the three rich states I mentioned earlier.

Without subsidies, I predict that there will be a massive population shift from the poor to the rich states. I will leave it to you to imagine the difficult problems that the consequences of these economic disparities will bring to the entire federal country.

There is actually an existing case that you can examine. The pending bill on the Bangsamoro Basic Law provides for a substantial permanent subsidy to Bangsamoro. It also provides for an additional substantial, but temporary, long-term subsidy. Shall we give similar subsidies to all poor states? How will these affect the rich states, and how will they react?

The red flag in Philippine federalism is that we are borrowing a foreign concept and are wanting to establish it on Day 1, while it should be noted that the successful and economically developed federal countries in the world today developed into federalism over hundreds of years.

To better understand federalism, it will be helpful to review the history of the US and Germany and their component federal states. These component states federated themselves not for economic reasons. The US did it to provide for a unified and, therefore, stronger defense against external threats; Germany, to unite the German-speaking people (except Austria) and, consequently, to project German power.

As an alternative to Philippine federalism, and considering that we have now delved into the desire for autonomy, let us consider dividing the country into independent states with each resulting in a new country having full control over itself and being politically independent from the others, a la Czechoslovakia. Doing so may achieve a much better result overall.

If the drive to federalism persists and cannot be stopped, I suggest that the final approval be made on the basis of the majority vote of the population in each state. A state that says “No” should be given respect and allow it to become separate and politically independent from the others. Let it be.


Benjamin R. Punongbayan is the founder of Punongbayan & Araullo, one of the Philippines’ leading auditing firms.



As published in BusinessWorld, dated 03 May 2018